HomerJ wrote: ↑
Mon Nov 27, 2017 4:59 pm
lack_ey wrote: ↑
Mon Nov 27, 2017 12:22 pm
eye.surgeon wrote: ↑
Mon Nov 27, 2017 12:18 pm
In other news the sky is blue.
The chance of a correction is always 100%, it's just a matter of when. For boglehead investors it doesn't change much.
Okay, good to know that there's a 100% chance it might rain tomorrow.
There is a 100% chance it will rain SOMEDAY.
I stated that as intended. There's a 100% chance it might rain tomorrow under reasonable definitions of "might rain." That is, like the other statement, the uncertainty has been tucked away into the "might" and thus renders the number given (100%) useless. There's no point in specifying the 100% when the statement is trivially true.
The thrust of the article, in highlighting one portion of Vanguard's statements, is that the chance of a correction may be higher than usual, even up to 69% now in a given year, under a very tame definition of what a correction entails (10% drawdown).
You can think that's too high, too low, about right, or not have an opinion / don't know. Then regardless of the previous answer, there are a range of things you could do in response to that. I would say in the range of "not much at all" may be appropriate.
It's not like there's some amazing underlying insight here, though, and I don't think anybody really trusts Vanguard's simulation to be perfectly accurate in a statistical sense. There's a lot of residual randomness left even for those who think they can do better than "don't know."